CMS Expert Guide to Holding Company Regimes in Austria

While Austria has no specific tax regime for holding companies, holding companies can benefit from the tax benefits more widely available. These include:

1. a tax exemption for inbound dividends and capital gains; and
2. a withholding tax exemption for outbound dividends.

• 0% rate of corporation tax on inbound dividends, with no minimum shareholding or minimum holding period for dividends received from Austria or another EU Member state.
• For other jurisdictions, a minimum shareholding of 10% applies, with a 1-year minimum holding period.
• 0% rate of corporation tax for capital gains, with a minimum shareholding of 10%, and a 1-year minimum holding period for gains for disposals of companies incorporated in EU Member States and other jurisdictions.
• 0% rate of withholding tax on interest payments. There is generally a 0% rate of withholding tax on interest payments on shareholder loans.
• 0% rate of withholding tax on outbound dividends paid from limited liability companies and stock corporations to parent companies in other EU Member States, with a minimum shareholding of 10%, and a 1-year minimum holding period.
• The exemption is also available for permanent establishments in other EU Member States. Parent companies in other jurisdictions will need to rely on a double tax treaty (of which Austria has a wide network) in order to benefit from a reduced rate of withholding.
• Anti-abuse rules can apply in certain circumstances (i) to profits of subsidiaries in ‘low’ tax jurisdictions and (ii) to dividends of ‘low’ taxed overseas subsidiaries, such that those profits / dividends are attributed to the Austrian holding company. Upon request, foreign corporate income tax will be credited against Austrian corporate income tax.

Austria’s broad range of exemptions from corporation tax on dividends, capital gains and interest are the main benefits for holding companies. In particular, in contrast with many jurisdictions who levy withholding tax on interest, there is generally a 0% rate of withholding tax on interest payments on shareholder loans. In particular, this makes Austria an attractive jurisdiction for a holding company.